‘Are end-of-service benefits based on an employee’s current salary?’

A worker’s gratuity is calculated on the basis of their last wage, according to UAE Labour Law

Business woman giving bribe money in a brown envelope while give success the deal to finishing contract agreement, Bribery and corruption concept.

My current salary is Dh19,500 per month. However, my contract states Dh15,000 and the terms have not been changed to reflect my higher salary. I now want to leave the job and have served my notice in writing.

We don’t have a human resources professional, so my boss calculates the end-of-service gratuity for all employees. I have been with the company for six-and-a-half years and my salary has increased each year.

My boss says that he needs to use the different salaries for each period to work out what I am due but I thought the current salary is used to calculate the end-of-service benefits. Can you confirm so I can claim what I am owed? AS, Sharjah

AS is correct in believing that the current salary is the figure that needs to be used when calculating the end-of-service benefit.

This is clearly set out in Article 134 of the UAE Labour Law, which states: “Without prejudice to the provisions of certain laws on pensions and retirement benefits granted to workers in certain establishments, end-of-service gratuity shall be calculated on the basis of the last wage due to monthly, weekly and daily – paid workers …”

“The wage used as a basis for calculating the end-of-service gratuity shall not include payments made to the worker 'in rem', housing, transport and travel allowance, overtime pay, representation allowance, cashier’s allowances, children education allowance, allowances for recreational and social service, and any other bonuses or allowances.”

The Latin phrasein rem” is a legal term meaning “against or about a thing” and in this context refers to any property or item such as a computer or a car.

AS is entitled to the end-of-service gratuity on their basic salary of Dh19,500, no matter what the contract says. The salary paid each month is proof of this. Unless there is any paperwork that states that the additional amount is an allowance, it will be deemed basic salary.

At the time of any salary increase, correspondence should be issued and signed by both employer and employee confirming the details to avoid any future confusion or dispute.

How long does it take an employer to cancel a work permit after an employee resigns from their job? Can the employee leave without waiting for the cancellation of the work permit? VD, Abu Dhabi

If someone resigns from employment, they are required to give notice in accordance with the terms of their contract.

In most cases, this will be 30 days as set out in Article 117 of the UAE Labour Law, which says: “The employer and the worker may terminate the employment contract with undetermined term for valid grounds at any time subsequent to the conclusion of the contract, and such after notifying the other party thereof in writing at least 30 days before the termination thereof.”

If an employee fails to give proper notice, they can be penalised, according to Article 119, which says: “Should the employer or worker fail to notify the other party of the termination of the contract, or should such party reduce the notice period, the notifying party shall pay to the other party a compensation known as compensation in lieu of notice, even if such failure to notice or reduction of the period does not cause damage to the other party. Such compensation shall be equal to the wage of the worker with regards to the entire notice period or the reduced part thereof. The compensation in lieu of notice shall be calculated on the basis of the last wage paid to the worker …”

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At the time of any salary increase, correspondence must be issued and signed by both employer and employee confirming the details to avoid any future confusion
Keren Bobker, senior partner, Holborn Assets

Once the notice period ends, the employer must cancel the visa and the work permit without delay and pay the employee all that is due to them in salary, accrued annual leave and any end-of-service gratuity. The cancellation process is quick and should not take more than three working days.

The new employer must have applied for a new visa for VD to start his new job legally.

How can I check my employment contract without asking my employer for a copy? I don’t remember the details and want to check the document before I start looking for a new job. WT, Abu Dhabi

WT has confirmed that she works for a mainland employer, so a copy of her contract will be lodged with the Ministry of Human Resources and Emiratisation. She can visit the MOHRE website to view and print a copy of her employment contract.

On the website, select the services tab, scroll down to job offers and contracts services. Further scroll down to the ‘My Contract’ section and search either by transaction number or personal details.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with more than 25 years’ experience. Contact her at keren@holbornassets.com. Follow her on Twitter at @FinancialUAE

Updated: September 25th 2021, 5:00 AM
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